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Farmers keeping debt in check

Cattle producers in north-western Queensland, affected by drought and disruption to the live export trade, are an exception to the lower debt levels being experienced by most farmers.

Matt Brann

A study has found most Australian farm businesses have reduced their level of debt in recent years.

Research published in the Australian Farm Institute's Farm Policy Journal found there were some exceptions, with higher levels of debt among northern beef producers and Western Australian grain farmers.

The institute's executive director Mick Keogh says there's been a more cautious approach to farm business decisions in the wake of the global financial crisis.

"We've seen a levelling off in land values.

"Fortuitously, we've also seen a reduction in interest rates, so that's given farmers who wanted to pay down debt a bit of a breather and a bit of an opportunity to get those numbers into order."

The research comes just months after warnings of a national farm debt crisis.

"I think there has been a bit of a sense around the sector that all farms are disappearing under a sea of debt and the sector is in real strife. That's certainly not the evidence that's available," Mr Keogh said.

Researchers also found the model of the family farm business continues to dominate Australian farming.

"There was concern about the future financing of the agricultural sector, with a lot pointing to either a takeover by corporates, or a takeover by overseas investors, as the only way that farming will be able to manage into the future.

"Certainly the evidence presented in some of the papers in this journal is not that.

"It's still pointing to a continued, very strong role for family farms and farmers financing those farms within their families and using bank finance, rather than moving to a corporate or overseas ownership model."